INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Reason to believe - Vague and irrelevant information

AO received information from Investigation Wing that area of Chennai Metropolitan region was much larger than what was stated by Tehsildar in his report and land sold by assessee was situated at about 3 kms. from the Chennai Metropolitan area. Accordingly, AO reopened assessment on the ground that gain arising from sale of land was chargeable to tax and income of assessees in the form of capital gains had escaped assessment.Held: Location of land from local limits of Channai Municipal Corporation was relevant to decide as to whether said land was an agricultural land in India within the meaning of clause (iii) of sub-section (14) of section 2 and distance of land from Chennai Metropolitan area was not relevant in this context. Thus, information received by AO regarding location of land being situated at about 3 Kms. from Chennai Metropolitan area was vague and irrelevant and there was no live-link or nexus of said information with the belief entertained by AO that exemption claimed by assessees was wrongly allowed in assessment originally completed and there was escapement of income from assessment. Accordingly, reopening of assessment was invalid.

Relied:ITO, I Ward, Distt. VI, Calcutta, & Ors. v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) : 1976 TaxPub(DT) 742 (SC) and Sheo Nath Singh v. Appellate Asstt. CIT (Central), Calcutta, & Ors. (1971) 82 ITR 147 (SC) : 1971 TaxPub(DT) 362 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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